Correlation Between Morgan Stanley and Ensurge Micropower

Can any of the company-specific risk be diversified away by investing in both Morgan Stanley and Ensurge Micropower at the same time? Although using a correlation coefficient on its own may not help to predict future stock returns, this module helps to understand the diversifiable risk of combining Morgan Stanley and Ensurge Micropower into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Morgan Stanley Direct and Ensurge Micropower ASA, you can compare the effects of market volatilities on Morgan Stanley and Ensurge Micropower and check how they will diversify away market risk if combined in the same portfolio for a given time horizon. You can also utilize pair trading strategies of matching a long position in Morgan Stanley with a short position of Ensurge Micropower. Check out your portfolio center. Please also check ongoing floating volatility patterns of Morgan Stanley and Ensurge Micropower.

Diversification Opportunities for Morgan Stanley and Ensurge Micropower

-0.03

Correlation Coefficient

Morgan Stanley  Ensurge Micropower

Good diversification

The 3 months correlation between Morgan and Ensurge is -0.03. Overlapping area represents the amount of risk that can be diversified away by holding Morgan Stanley Direct and Ensurge Micropower ASA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Ensurge Micropower ASA and Morgan Stanley is a relative statistical measure of the degree to which these equity instruments tend to move together. The correlation coefficient measures the extent to which returns on Morgan Stanley Direct are associated (or correlated) with Ensurge Micropower. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Ensurge Micropower ASA has no effect on the direction of Morgan Stanley i.e., Morgan Stanley and Ensurge Micropower go up and down completely randomly.

Pair Corralation between Morgan Stanley and Ensurge Micropower

Given the investment horizon of 90 days Morgan Stanley is expected to generate 5.58 times less return on investment than Ensurge Micropower. But when comparing it to its historical volatility, Morgan Stanley Direct is 4.82 times less risky than Ensurge Micropower. It trades about 0.03 of its potential returns per unit of risk. Ensurge Micropower ASA is currently generating about 0.03 of returns per unit of risk over similar time horizon. If you would invest  121.00  in Ensurge Micropower ASA on December 4, 2024 and sell it today you would earn a total of  6.00  from holding Ensurge Micropower ASA or generate 4.96% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	56.3%
Values	Daily Returns

Morgan Stanley Direct  vs.  Ensurge Micropower ASA

Morgan Stanley Direct

Risk-Adjusted Performance

Very Weak

Over the last 90 days Morgan Stanley Direct has generated negative risk-adjusted returns adding no value to investors with long positions. Despite quite persistent fundamental indicators, Morgan Stanley is not utilizing all of its potentials. The latest stock price mess, may contribute to short-term losses for the institutional investors.

Ensurge Micropower ASA

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Ensurge Micropower ASA are ranked lower than 14 (%) of all global equities and portfolios over the last 90 days. Despite quite conflicting essential indicators, Ensurge Micropower disclosed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Morgan Stanley and Ensurge Micropower

The main advantage of trading using opposite Morgan Stanley and Ensurge Micropower positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Morgan Stanley position performs unexpectedly, Ensurge Micropower can make up some of the losses. Pair trading also minimizes risk from directional movements in the market. For example, if an entire industry or sector drops because of unexpected headlines, the short position in Ensurge Micropower will offset losses from the drop in Ensurge Micropower's long position.

The idea behind Morgan Stanley Direct and Ensurge Micropower ASA pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.

Check out your portfolio center.

Note that this page's information should be used as a complementary analysis to find the right mix of equity instruments to add to your existing portfolios or create a brand new portfolio. You can also try the Aroon Oscillator module to analyze current equity momentum using Aroon Oscillator and other momentum ratios.